It was a volatile fourth quarter for U.S. equities as investors became concerned over slowing global economic growth and uncertainty surrounding the timing of an expected interest rate rise by the U.S. Federal Reserve. Consumer-related sectors performed well, while the industrial and commodity-related sectors struggled. Within S&P 500 Index, nine of 10 sectors posted positive returns. Health care was the best performer. Energy declined during the period. Large-cap growth stocks outperformed large-cap value stocks, and large-cap stocks distanced small- and mid-caps.
The Growth & Income Fund returned 8.17% in the quarter compared with 7.04% for the S&P 500 Index and 6.17% for the Lipper Large-Cap Core Funds Index. For the 12 months ended December 31, 2015, the fund returned 4.12% versus 1.38% for the S&P 500 Index and −0.67% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 4.12%, 12.38%, and 7.47% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.67% as of its fiscal year ended December 31, 2014.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
We favor companies that can generate stable earnings and cash flow growth. Our bottom-up stock selection process relies on a rigorous valuation assessment to find stocks with the most potential for capital appreciation. Because of the concentrated nature of the portfolio (typically about 50 domestic large-cap growth and value stocks), we want to invest in high-quality, well-managed, fundamentally sound firms that have great products and services.
During the quarter, we maintained a somewhat defensive posture. We added several utility companies, increasing our overweight allocation, and real estate investment trusts, and we trimmed the industrials and business services allocation. Stock selection in the information technology and consumer discretionary sectors generated strong relative performance, as did our underweight in energy. However, stock selection in the financials and consumer staples detracted from relative returns.